Warren Buffett, the most famous investor in the world, was criticized at a Las Vegas SALT Conference on Wednesday, much to the applause of the audience. Daniel Loeb, a billionaire hedge fund manager, threw the verbal punches during an on-stage rant, saying the well-known investor, another billionaire, does not practice what he preaches. Loeb is not the only person who has put Buffett under fire of late.
The tangent started after the host of the SALT Conference, Anthony Scaramucci, had asked Loeb about his favorite books. Loeb replied that he enjoyed literature and self-help books, authored by Charlie Munger, the right-hand man of Buffett at Berkshire Hathaway. This was all that was necessary to send Loeb into a frenzy of criticism aimed directly at Buffett. “I love reading Warren Buffett’s letters”, “he has a lot of wisdom” but there is a “disconnect between his wisdom.” Loeb said the business magnate, who effectively created the first-ever hedge fund, was openly critical of hedge funds. In another contrast of actions and words, according to Loeb, the most famous investor in the world has also been critical of activist investors, yet he has been dubbed “the first activist”. Buffett does everything possible to avoid taxes, but at the same time he wants people to fork out more taxes, Loeb said. To add yet another example of Buffett saying one thing, but doing another, he condemns financial services firms, but at the same time he invests in them. The hedge fund industry audience clapped loudly and laughed, and host Scaramucci, apologized to Buffett.
Loeb’s outburst at the expense of the famous businessman may be linked to recent exchanges relating to Dow Chemical. As an activist investor, Loeb has been vigorously campaigning for Dow Chemical to make changes. Earlier this year, Buffett, a Dow Chemical shareholder, met with the corporation’s chief executive officer Andrew Liveris. Liveris’s recollection of the meeting was that the shareholder had expressed his appreciation for Dow Chemical being operated for the benefit of the investors who would stick by them compared to the investors who would leave. This was considered as a dig at Loeb as activist investors are often seen as being driven by short-term gains and the satisfaction of receiving a quick return.
In saying that, other fund managers have shown they agree with Loeb’s sentiments. The SALT Conference last year had Passport Capital’s John Burbank, a macro fund manager, joking that the world’s most famous investor is “basically a tax evader”. The crowd clapped and laughed then too.
Criticism of the well-known businessman has been on the rise in recent times. Several pointed questions was directed towards him at the annual shareholders meeting of Berkshire at the weekend, following the Center for Public Integrity and The Seattle Times’ investigation into a Berkshire unit’s lending habits. The unit builds mobile homes.
Buffett began his financial success at an early age. Growing up, he sold goods such as newspapers, bubble gum and sodas to make money. As he grew older, he supplemented this income with money he received from detailing cars. He split the cost of a $25 pinball machine with a friend and placed it in a barber shop to make money from people using the arcade game as they waited to get their hair cut or shaved. Within just three months, the boys had placed pinball machines in a number of other locations for the same purpose. At just 11-years-old, Buffett had made his first stock purchase. He bought shares in Cities Service for himself and his sister, a petroleum giant that later became known as Citgo. He then purchased his first company while at high school. Buffett later became known as the most famous investor in the world, when criticism soon followed.
By Rebecca Brown
Photo by Images Money – Flickr License